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Wide Revenue Variation for Interactive Entertainment Companies November 30, 2004 Every November we publish our indicator of where the interactive entertainment market is headed in terms of company revenue. The following chart shows the most recently reported revenue for 17 public game companies. Together these companies have over $25 billion in combined annual home video and PC game revenue (for each company’s last fiscal year). Four companies Sony, Nintendo, Microsoft and Electronic Arts, account for about two-thirds of this revenue. The chart below compares company revenue for the last two fiscal years (in most cases the last fiscal year ended 3/31/04) and the most recently reported period (in most cases the six months ending 9/30/04). For the last full fiscal year, the 17 companies had a 5% revenue decline to $25.6 billion. This slight decline has continued through the first part of fiscal 2005 with reported revenues down 6%. These revenue declines are fairly modest considering that at this point in the lifecycle prices are dropping significantly. Of course, quarterly revenue changes vary widely by both company and on a quarter-to-quarter basis. Interactive entertainment is still very much a hits driven business. Companies like Electronic Arts and Activision have continued to show strong increases. Other companies like Atari, Capcom and Vivendi Universal Games have shown significant declines in revenue. Many companies have had a slow first part of 2004 and are counting on one or more hit products in holiday 2004 to drive overall annual performance. The most notable of these companies are Take-Two Interactive, THQ and VU Games. The only company that seems relatively immune from significant revenue fluctuation based on the performance of one or two hit products is Electronic Arts. EA continues to pull away from the pack and its revenue could soon equal three times that of the next largest independent game publishers. Next month we will take a look at company stock prices. Game company stocks often show a dip in December as there always seem to be concerns that holiday sales might not reach expectations. This year should be especially interesting because there were many big name titles with very high sales expectations. As part of our ongoing research efforts DFC Intelligence is delivering free monthly briefs on hot topics in the interactive entertainment and video game industry. You (or a colleague of yours) have signed up to receive these briefs. DFC Intelligence’s research services provide detailed strategic analysis of the interactive entertainment industry. A sample of reports on the video game and PC game market include: Worldwide Market Forecasts for the Video Game and Interactive Entertainment Industry Complete five-year forecasts for all individual console and portable game platforms by region (Asia, Europe/PAL, U.S., rest of world)) through 2009. Also included are PC game forecasts and historical sales figures. The report has several scenarios for future market growth including an analysis and forecasts for new systems from Sony, Microsoft and Nintendo, as well as new portable game systems. The Business of Computer and Video Games This report includes an historical analysis, overview of individual hardware system, top-selling games, game genres, consumer demographics, business models, retailer profiles, marketing elements and case studies, industry trends. Market Leaders in the Video Game and Interactive Entertainment Industry This 600+ page report profiles major companies in the interactive entertainment industry. Each individual company report is about 15-40 pages and has an historical background, financial overview, product analysis and a frank assessment of the outlook for that company. The Online Game Market This 660 page report contains a comprehensive analysis of the online gaming market. Includes current sales trends, market forecast, and in-depth company profiles.
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